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Covering all the bases in your partnership agreement

A partnership can be a purely business arrangement or a more intimate relationship. You may have joined with a friend or family member to start a business, or you may have sought out someone who could provide the capital, networking or other resources you needed. You may have a silent partner or someone who has a more visible and equal share in the day-to-day workings of the business.

Since each partnership may have its unique elements, it follows that their partnership contracts will have unique terms. However, in most partnership agreements, certain elements are universally beneficial. To reduce the chances that you and your partner will run into disputes that could jeopardize the future of your Texas business, you would be wise to consider including these terms in your contract.

Make your contract work for you

The goals of your business will dictate many of the terms of your partnership agreement. However, you will also want to include those general points that often create confusion or build resentment between partners, such as:

  • How will each of you contribute to the company? Will you both provide an equal share of money, or will one of you offer more time and service as a contribution?
  • Will your percentage of ownership determine how you divide profits and losses?
  • When will you and your partner withdraw profits from the business?
  • Who will have authority to incur debt, sign contracts, withdraw money and other critical actions?
  • How will you make decisions about the operation and direction of the business?
  • How will you resolve conflicts that arise when you cannot reach a mutual decision?
  • When and how will the partnership end?

While it may seem odd to plan for the end of the partnership before you even begin, having this contingency in place can potentially save you enormous trouble. For example, what will happen to your partner's half of the business if he or she should die? Will your partner's spouse inherit that half of your business, or will your agreement prevent that from happening?

Whether you are ready to put the terms of your partnership into a contract or you are facing a dispute that you and your partner cannot resolve, you may benefit from sound advice from a legal professional. By reaching out to a skilled attorney with experience in every aspect of business law and litigation, you may obtain the advice you need and a solid plan for meeting your goals for your business.

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17330 Preston Rd.
Suite 100-A
Dallas, TX 75252

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